Secondary Perils Turn into a Primary Concern for Insurance Buyers

Historically, floods, hurricanes, and earthquakes have been known for generating historic losses and headlines, but the insurance industry is increasingly concerned about the mounting financial impact of so-called secondary perils. Hail storms, tornadoes, thunderstorms, and wildfires are causing more frequent and severe losses that mount into the tens of billions of dollars on an annual basis, often outweighing losses from major perils in recent years. Over the last 40 years, a pattern of more frequent natural catastrophe events has emerged, a trend that has further accelerated over the last decade, according to AM Best (source 1).


While modeling for primary perils like hurricanes, floods, and earthquakes has become more sophisticated over the last few decades, only relatively recently has such technology been brought to bear on secondary perils. The lack of a longer modeling track record can foster uncertainty when it comes to underwriting secondary perils, in turn creating volatility in pricing and availability that can make insurance costs harder to predict and coverage more difficult to obtain. When greater market volatility is a factor, partnering with experienced wholesale brokers capable of providing sound guidance on the full range of coverage can help make sure policyholders are able to obtain the best possible coverage.

Worldwide estimated insured losses from natural catastrophes reached $35 billion in the first half of 2022, 22% above average for the past 10 years.2


The historic losses from Hurricane Ian, now estimated by some at up to $74 billion, mark it as one of the most damaging natural disaster events ever, but insurers also consider the smaller, increasingly frequent catastrophes. Secondary perils such as hailstorms, tornadoes, and wildfires continue to drive insurance losses globally, due in part to rapid urban development as well as higher property values in disaster-prone areas. In the first half of 2022, global catastrophe losses included winter storms in Europe and flooding in Australia, each resulting in insured losses of around $3.5 billion. For all of 2021, secondary perils accounted for more than 70% of all insured losses.2

In the U.S., a December 2021 tornado in western Kentucky caused an estimated $4 billion in insured losses, and a February 2021 winter storm that put Texas in a deep freeze caused an estimated $15 billion in insured losses.3 An August derecho that battered Iowa with straight-line winds of 140 mph caused at least $2.9 billion in insured losses. Massive wildfires also bring big losses. In California, six of the 10 largest wildfires to date occurred in 2020 and 2021, according to CalFire, topped by the 2020 August Complex Fire that burned more than a million acres and the July 2021 Dixie Fire that decimated more than 960,000 acres.4 The Marshall Fire in Boulder County, Colorado, caused insured losses topping $2 billion by 2021 year-end.5 Many will also remember the 2018 Camp Fire that accounted for $10.7 billion in insured losses and the 2017 Tubbs fire where losses reached $9.6 billion when adjusted for inflation.5,6


While secondary perils are increasing in frequency, severity, and impact, they remain more poorly modeled than primary perils, according to a report by the University of Cambridge Institute for Sustainability Leadership.6 When it comes to risk assessment; however, secondary perils present difficulties because they are often highly localized and variable depending on local conditions and land use.7

A major problem with secondary perils is that while they often impact a relatively small area they can occur over a very large region. That includes areas like Tornado Alley, which covers the entire Midwest, and the wildfire risk that cuts across huge swaths of the West. The U.S. alone experiences about 10,000 severe thunderstorms each year, which can spawn tornadoes and hail or spark fires.8 In addition, the increased frequency of damaging thunderstorms and other secondary perils has been outstripping underwriters’ ability to measure and effectively control capacity and pricing, due in part to demographic and economic growth that has driven up the costs of such incidents. New manufacturing facilities in tornado-prone areas of the South, for example, may represent hundreds of millions of dollars in potential exposure to tornadoes.


Insurance buyers are seeking not only more clarity around pricing, but also consistency in availability in order to plan adequately. More insureds have faced the loss of coverage in recent years as markets have pulled back in high-loss areas. Many more have found themselves on the hook for a larger portion of the risk. Over the last few years, insureds in hail-prone areas have been hit with rising percentage deductibles on convective storm coverage. These deductibles can represent a significant financial exposure for insureds on properties valued in the tens of millions of dollars or more. In some cases, buyers may need to find new coverage at renewal when a market exits due to continued losses on secondary perils.

Developing more sophisticated modeling tools for secondary perils would help the insurance industry, and insureds, by diminishing uncertainty as rising losses have elevated insurance costs.

Along with helping insurers to more confidently price and allocate capacity for secondary perils, better models can also help insureds better understand the actions they can take to mitigate the risk to their property and help manage insurance costs as well as their own financial risk.

Common Secondary Perils (source 8)- Thunderstorms & Torrential Rainfall Snow & Ice Storms Tornadoes Drought & Wildfire Outbreaks Hail Storms Tsunamis Landslides Post-earthquake Liquefaction & Fire


As underwriters hone in on secondary perils, it’s more important than ever that insureds provide data to make a strong case for their individual properties and portfolios. Some data, of course, may highlight areas that need improvement, which can help to manage future insurance costs if proactive steps are taken.

Buyers and their agents should be careful to identify the positive features of their facilities and their exposures as well as how they plan to mitigate any potential risks. That may include physical features such as a roof parapet, flood walls, and flood doors, or actions such as installing a hail net or creating defensible space around a property that may be at risk of wildfire. Simple location within a building may be important if, for example, a computer center is located on a higher floor and not as directly exposed to flood danger. Planning is also important. A detailed and proactive emergency plan can help to reassure underwriters.

What’s most important for the retail agent and the insured is providing as much information as possible well in advance of renewal to clearly demonstrate what the actual exposure is and what mitigating factors would be beneficial in the decision-making process.


Losses from secondary perils have been trending higher for years, punctuated by massive losses from storms like Hurricane Ian. The insurance industry continues to work on better managing losses associated with thunderstorms, wildfires, and other secondary events, but the complexity of estimating losses makes it more difficult for insureds to plan financially for insurance costs. Buyers are seeking greater consistency in both pricing and availability of coverage for secondary perils, but market volatility may persist until carriers get a better handle on costs associated with secondary perils. In uncertain markets, brokers with deep experience in placing property coverage for natural disasters and strong relationships with insurance markets can help agents and insureds to find the best available coverage. Contact your CRC Group producer today to learn how we can help.


  • David Christopher is a Senior Vice President and Property Broker with CRC Group’s Norcross, GA office.


  1. Best’s Commentary: Secondary perils taking an increasingly larger share of U.S. catastrophe losses, AM Best, January 2022,’s-Commentary-Secondary-Perils-Taking-an-Increasingly-Larger-Share-of-U.S.-Catastrophe-Losses
  2. Floods and storms drive global insured catastrophe losses, Swiss Re, August 2022,
  3. Natural Catastrophes in 2021, Munich Re NatCatService, January 2022,
  4. Top 20 largest California wildfires, CalFire, October 2022,
  5. Facts + Statistics: Wildfires, Insurance Information Institute,
  6. ClimateWise: Insuring a sustainable future, University of Cambridge Institute for Sustainability Leadership, Deloitte, 2022,
  7. Sigma 2/2019: Secondary natural catastrophe risks on the front line, Swiss Re, April 2019,
  8. Severe Weather 101 – Thunderstorms, NOAA National Severe Storms Laboratory,